US Dollar Index Technical Forecast: USD Weekly Trade Levels (DXY)
- US Dollar plunges back to 2023 yearly open- approaching multi-month uptrend support
- USD risk of downside exhaustion / price inflection into close of November
- DXY resistance 104.63, 105.67, 107.18 – Support 102.55/99 (key), 101.90s, 101.08
The US Dollar is in freefall with DXY now down more than 3.1% since the start of November. The plunge takes the index towards multi-month trend support and the last line of defense for the bulls. The fate of the July rally now hangs in the balance. These are the updated targets and invalidation levels that matter on the DXY weekly technical chart.
US Dollar Price Chart – USD Weekly (DXY)
Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView
Technical Outlook: In my last US Dollar Technical Forecast we noted that DXT had, “reinforced a key range between 105.39-107.18 – looking for the breakout for guidance with the long-bias still vulnerable while below.” An outside-weekly reversal the following week plunged lower with the index plummeting more than 3.8% off the yearly highs.
The decline is attempting to break below confluent support today at the objective yearly-open / 52-week moving average at 103.49/61. A major support hurdle rests just lower at 102.55/99- a region define by the 61.8% Fibonacci retracement of the yearly range, the 2016 high-close, and the January low-week close. Note that a multi-year parallel also converges on this slope and highlights its technical significance- look for a reaction there IF reached. Ultimately, a break / close below the lower parallel (blue, currently ~101.90s) is needed to suggest a more significant trend reversal is underway / invalidate the July uptrend.
Initial weekly resistance is now eyed at with the March high-week close (104.63) backed by the August 2022 low-week close at 105.67- a breach / weekly close above this threshold would be needed to mark uptrend resumption back towards 107.18 again.
Bottom line: The US Dollar breakdown is now approaching multi-month uptrend support– a critical level for the bulls. The immediate downside bias may be vulnerable into this threshold and we’re on the lookout for possible exhaustion / price inflection just lower. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards 102.55/99- rallies should be limited to 105.67 IF price is heading lower with a break of this formation threatening another accelerated sell-off in the Greenback. Stay nimble into the close of the month. I’ll publish an updated US Dollar Short-term Outlook once we get further clarity on the near-term DXY technical trade levels.
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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on Twitter @MBForex